In 1957 SIFCO was considering whether to invest in a forge plant in either Argentina or Brazil. SIFCO president C.H. Smith Jr. and his executive strategic team came to a conclusion. “Enough surplus equipment was available for the nucleus of forge plants in both countries if we wanted that,” explained Smith. “We eventually rationalized that if we were doing one, we might as well do two.”
“The Willys [automobile manufacturer] people in Brazil wanted very much for us to do the same kind of thing with them that we’d done with IKA [Industrias Kaiser Argentina] in Argentina; that is, invest directly [in their company]. We didn’t want to do that in Brazil,” explained Smith, “because we didn’t want to tie our efforts to a single customer. There were many other opportunities in Brazil.”
Brazil was considerably larger and had a more vigorous economy than did Argentina. Arthur Andersen, a major U.S.-based accounting firm with an office in Brazil, informed SIFCO of a Brazilian operation, the Vasconcellos group, which had a basic forging process and wanted to upgrade its technology in order to compete in the burgeoning Brazilian and South American automotive supply industry. It seemed ideal for SIFCO to partner with an existing company that had equipment and a workforce experienced in working with hot metal.
Both SIFCO and Vasconcellos wanted to keep the project going, but lacked sufficient funds. A third company then entered the picture, Chicago-based American Brakeshoe, that was very interested in joining the South American venture. American Brakeshoe had the same postwar challenge of surplus capacity and equipment in the U.S. as did SIFCO, and had the cash on hand to meet a June 30, 1959, deadline of an investment incentive law imposed by the Brazilian government. The partnership—and ensuing race to get the operation in place—was on.
The shipping of forging equipment to Brazil went down to the wire. “The last ship that had our equipment arrived in the port of Santos on the day the law expired,” recalled C.H. Smith Jr. “Gus Schrader, our man down there, got a small boat, met this ship in the channel, got papers from the captain, brought them back and got them validated before the end of the day. It was that close.”
The new three-way partnership was formed as SIFCO do Brazil. Limited operations began in 1959, with equipment from the SIFCO and American Brakeshoe operations. Much of the equipment had to be repaired and upgraded to be ready for production, so SIFCO sent a team to Brazil consisting of a qualified die-sinker, equipment maintenance personnel, two forge people and a chief metallurgist. American Brakeshoe added personnel as well, and the Vasconcellos group provided the company’s manager.
In 1960, the U.S. drop-forging industry was at a low point. But things were looking up for SIFCO do Brasil. The majority of the market was automotive—mostly forgings for Kaiser’s Willys Overland, which were made for the growing Brazilian market.
In keeping with its strategic plan, SIFCO continued to gain other customers, and by the mid-1960s SIFCO de Brasil was a major supplier of drop forgings to not only Willys Overland, but to Mercedes-Benz, Volkswagen, and many American companies operating in Brazil, such as General Motors, Caterpillar, and Eaton Yale & Towne. In SIFCO’s first decade of operations the Brazilian automotive market expanded from 30,000 to 280,000 vehicles produced annually. SIFCO do Brasil had grown to the largest forge shop in the Southern Hemisphere.
Brazil remained an important part of SIFCO’s financial health through the 1960s and 1970s, as the government was receptive and committed to modernizing the country and its industrial base. But when hyperinflation hit Brazil in the 1980s, SIFCO’s investment was eroded substantially. SIFCO began to divest its Brazilian interests beginning in 1986, and completed this process in 1988.
Nonetheless, the many positive experiences SIFCO had in Brazil—just as in Argentina—had given the company a growing international reputation for technology transfer and forging design excellence within metalworking circles throughout the world.